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Venezuela on Brink of Hyperinflation

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Re: Venezuela on Brink of Hyperinflation

#41

Post by Mikeb85 »

tomp wrote: post #12

I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing). I guess the only difference is that in the West, the money goes mostly to the banks, which distribute it to the companies or invest it in the stock market and real estate. Consequently, the rich get richer an…

It's because there's demand for US dollars. More importantly, people see value in US goods and services (which are bought in US dollars), whereas there's no demand for Venezuelan goods and services (and this currency). This drives down their currency relative to imports and foreign currencies.

Re: Venezuela on Brink of Hyperinflation

#42

Post by bmelton »

kordless wrote: post #34
bmelton wrote: post #28

Earlier quoted context omitted.

So, I'll freely concede that I'm ignorant on the issue, but Bonsanto made an extraordinary claim below (that government forbids buying non-Venezuelan currency) that despite my initial idea, turns out to appear truthful. So, According to this somewhat recent article by Bloomberg[1], "A school teacher with 25 years of experience made 9,786 bolivars a month in 2014. That's about $35 a month at the current black market e…

Well that's depressing. I feel for my fellow engineer in Venezuela.

I admit that I'm pretty topic dumb -- the closest I can personalize this to is an Ameri-Cuban reality show that I watch, titled "Cuban Chrome"[1].

In it, the story apparently focuses on a couple of folks - a taxi driver, and members of a car club. Because of the trade embargoes (now lifted in theory) between Cuba and America, most of the "newer" cars in Cuba are 60s-era classics, for which finding parts is nearly impossible.

Apparently Cuba's embargo has left them trading with Russia, so, if you want/need a new carburetor for your American Chevrolet, you end up having to retrofit a diesel carburetor from a Russian schoolbus, at exorbitant prices, and only by trading labor with someone capable of making the retrofit work.

I know it's reality TV, which already makes it very unlike reality, but it's difficult to watch in spots, as I see people struggling with what would be, in America, a completely solved problem.

[1] - http://www.discovery.com/tv-shows/cuban-chrome/

Re: Venezuela on Brink of Hyperinflation

#43

Post by BurningFrog »

loblollyboy wrote: post #15
Bonsanto wrote: post #9

Earlier quoted context omitted.

I live in Venezuela and item's prices are raising horrible, let me tell you something I am electrical engineer and computer engineer, and my salary is only 10.3$/month, ridiculous, but his is how socialism works everyone are equalized but to poverty. To buy a car in Venezuela you need to save money for 50 years without buying food supplies, to buy a house it takes 200 years, to buy dollars you need to be a friend of…

seems to work just fine in scandinavia

According to the libertarian Cato Institute's Human Freedom Index, Sweden, Denmark and Finland are in the top 10 freest countries on earth. The US is at place 20 and Venezuela at 144 out of 152.

http://www.cato.org/human-freedom-index http://www.cato.org/economic-freedom-world

Scandinavia has very free market open economies coupled with extensive welfare states financed by high taxes. You can call that socialism if you want, but it is a very different system than the criminal tragedy that is Venezuela.

Re: Venezuela on Brink of Hyperinflation

#44

Post by dragontamer »

tomp wrote: post #12

I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing). I guess the only difference is that in the West, the money goes mostly to the banks, which distribute it to the companies or invest it in the stock market and real estate. Consequently, the rich get richer an…

> I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing).

Because we do it better than Venezuela. And honestly, that's all that there is to it. Injecting money into an economy is not necessarily a bad thing... depending on your goals.

For example, China is lowering the price of its Yuan (not necessarily through QE, but through similar means). This has the effect of encouraging factories to be built in China and arguably creates a net-gain.

Venezuela however is not playing anywhere close to the same game as the other world powers. They are printing money because they are out of money, and that is simply a bad situation to be in.

Re: Venezuela on Brink of Hyperinflation

#45

Post by aortega »

bmelton wrote: post #28
kordless wrote: post #16

Earlier quoted context omitted.

> We don't need you. Don't speak for me. Given at least half of us have no idea what 10.3$/month is, why don't one of you enlighten us and let us draw our own conclusions?

So, I'll freely concede that I'm ignorant on the issue, but Bonsanto made an extraordinary claim below (that government forbids buying non-Venezuelan currency) that despite my initial idea, turns out to appear truthful. So, According to this somewhat recent article by Bloomberg[1], "A school teacher with 25 years of experience made 9,786 bolivars a month in 2014. That's about $35 a month at the current black market e…

The 10.3 u$s per month is possible. You have to remember that using the government exchange rate, food also is very cheap. Gas is almost free, IIRC about 5 or 6 bolivars to fill a tank (about 0.006 u$s I think).

The thing is, you cannot buy anything imported because then the real exchange rate goes, and you actually can buy only u$s 10 worth of imported stuff. You are forced yo spend your salary in locally-produced stuff, that actually kinda work for countries like Argentina that produces a lot of stuff (except computers and high-tech products), but do not for Venezuela, that only produces oil.

Interestingly, what happens if you go with your US-savings, say, u$s 50000 to Venezuela? well then you are basically a king there. You could buy half a city with that money, thats why they had to put laws to prevent foreigners to do that kind of thing.

TLDR: You can be rich with u$s 10/month, as long as you dont leave the country and don't buy anything imported.

Re: Venezuela on Brink of Hyperinflation

#46

Post by crdoconnor »

tomp wrote: post #12

I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing). I guess the only difference is that in the West, the money goes mostly to the banks, which distribute it to the companies or invest it in the stock market and real estate. Consequently, the rich get richer an…

>I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing).

Printing money doesn't cause inflation. Spending does.

QE doesn't directly cause spending. It just lowers interest rates and hence shifts investors' investment preferences from treasuries to equities/land/housing/riskier debt as they try to get back the yield they used to have. This pushes up the price of housing and equities to absurd levels, among other things. That is, until they both crash.

That actually, perversely, causes CPI deflation. People are spending less on consumer goods as they need to spend extra service their mortgage/rent/retirement fund/student loan repayments.

Re: Venezuela on Brink of Hyperinflation

#47

Post by themeekforgotpw »

dageshi wrote: post #40
themeekforgotpw wrote: post #3

The United States has been working on a coup for Maduro, since its coup of Chavez hasn't worked out for it. This time it would really like to install Leonardo Lopez as he's willing to privatize Venezuelan oil to US companies. The US has been encouraging and organizing protests, gatherings and projecting anti-Maduro sentiment and news into the country. ( https://wikileaks.org/gifiles/releasedate/2012-06-18-08-canv...…

The US is literally producing more oil domestically than it can refine, it's got more cheap domestic oil than it knows what to do with... I don't discount American involvement but I'm not sure that oil is the great driving factor it may have been historically, the Americans are producing enough of their own.

The long term strategy of the US is to provide energy security to Europe between tar sands, crude, gas and oil. It has multilateral plans with Canada and Mexico to build North-South pipelines to achieve this.

Recently the conflict over oil off the shore of Guyana and the documents I linked to above (where it is STATED that the coup is motivated by oil) show recent actions by the US that contradict you.

And further it is not merely about TAKING the oil (though it is). Venezuela uses its energy economy to unilaterally fix political outcomes. Think their shipping of oil to Cuba despite US sanctions. The US wants control of that oil.

Re: Venezuela on Brink of Hyperinflation

#49

Post by Al-Khwarizmi »

xienze wrote: post #37
Al-Khwarizmi wrote: post #26

Earlier quoted context omitted.

I don't think that's so clear. But even if it's true, "works until it doesn't" is probably the best thing that can be said of any political/economic system to date. Free market capitalism has its own problems and its flagship country, the US, is increasingly considered to be in decline.

> I don't think that's so clear. Yes, it is clear. When you have a system in place that is predicated on having enough productive citizens to support the non-productive ones and your birth rates have fallen off a cliff you're in for trouble. > Free market capitalism has its own problems and its flagship country, the US, is increasingly considered to be in decline. Never said the US doesn't have problems. Just pointin…

> When you have a system in place that is predicated on having enough productive citizens to support the non-productive ones and your birth rates have fallen off a cliff you're in for trouble.

Every country with falling birth rates has that problem, regardless of the political/economic system. Barring extremist solutions like euthanasia, you need to support non-productive citizens and the resources for it need to come from productive citizens in some way, be it with government intervention or not.

Re: Venezuela on Brink of Hyperinflation

#50

Post by climber_mac »

pitiburi wrote: post #13
Bonsanto wrote: post #9

Earlier quoted context omitted.

I live in Venezuela and item's prices are raising horrible, let me tell you something I am electrical engineer and computer engineer, and my salary is only 10.3$/month, ridiculous, but his is how socialism works everyone are equalized but to poverty. To buy a car in Venezuela you need to save money for 50 years without buying food supplies, to buy a house it takes 200 years, to buy dollars you need to be a friend of…

I am not in Venezuela, but I work with some guys there. Your "10.3$/month" is a blatant, and pretty absurd lie. If this account created a few minutes ago is going to be used to spread lies, please use it somewhere else, not in HN. We don't need you.

I am also from Venezuela. He is not lying. He calculated his salary using the black market price of a dollar: 630 bolivares. He earns close to 7000 bolivares, which is minimum wage.

"Working with some guys there" is not as reliable a source as a guy who actually lives and works in the country. You shouldn't have called him a lier.

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